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State Department Announces Additional Sanctions Against Russia

Okay, I have to admit – it is getting hard to keep up with all the changes to the Russia Sanctions Program.  The Treasury Department, Office of Foreign Asset Control’s imposition of the Oligarch Sanctions (here) and Congress’ passage of the Countering America’s Adversaries Through Sanctions Act (“CAATSA”) (here) has made life difficult.  There is no way anyone can really follow the bouncing ball in this area.

All of this started when Russia annexed Crimea, moved into the Ukraine, and shot down the Malaysia Airlines passenger plane in July 2014.  From there, controversies have continued to broil into the Trump administration (as we all know).

Just to make everything a little bit more difficult, on August 9, 2018, the State Department announced (here) new sanctions against Russia for the use of a “Novichok” nerve agent in an attempt to assassinate UK citizen Sergei Skripal and his daughter Yulia Skripal, based on its August 6, 2018, determination under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (“CBW Act”) that the Russian Government has used chemical or biological weapons in violation of international law.  The CBW Act requires the President to impose sanctions on a foreign country with respect to which such a determination has been made.

The new sanctions took effect on August 27, 2018 and will be in place for one year.  (Here)  Under the CBW, the State Department is required to implement comprehensive sanctions covering a broad array of items, unless specific exceptions or waivers are made based on national security interests.

These measures shall be implemented by the responsible departments and agencies of the United States Government and will remain in place for at least one year and until further notice.

Trade compliance officers will face new challenges and wrinkles from the State Department’s actions, especially for those companies seeking licenses for exports from the State Department’s DTCC for ITAR-related items and the Commerce Department for dual-use items.

Arms Sales and Space Program Exception: The State Department announced the termination of (a) sales to Russia of defense articles, defense services, or design and construction services subject to ITAR, and (b) licenses for the export to Russia of any item on the ITAR’s United States Munitions List. However, the State Department waived these sanctions with respect to the issuance of licenses in support of government space cooperation and commercial space launches.  Licenses for such items and activities will be issued on a case-by-case basis consistent with the export licensing policy for Russia.

Arms Sales Financing:  The State Department terminated all foreign military financing for Russia.

Government Credits and Financial Assistance:  The State Department announced the termination of all credit, credit guarantees, or other financial assistance by any department, agency, or instrumentality of the US Government, including by the Export-Import Bank of the United States.

Prohibition on Exports of Goods and Technology Subject to National Security Controls and Waivers: The State Department prohibited all exports and reexports to Russia of goods and technology subject to National Security (“NS”) controls on the Commerce Control List (“CCL”) contained in Supplement No. 4 to Part 774 of the Export Administration Regulations (15 C.F.R. Part 730 et seq., “EAR”), except the following waivers:

Exports or reexports made pursuant to certain EAR license exceptions contained are allowed, including but not limited to exports or reexports under License Exception ENC, which applies to certain encryption-related items.

Certain Exports/Reexports Under New Licenses Permitted: The “new” license waiver applies only to licenses issued after the enactment of the CBW Act sanctions (i.e., issued after August 24, 2018). The State Department has not issued guidance on this point thus far.   The new license exception will apply to the following:

  • Exports and reexports necessary for flight safety of civil fixed-wing passenger aviation.
  • Exports and reexports for deemed exports and reexports to Russian nationals.
  • Exports and reexports to wholly-owned Russian subsidiaries of US companies.
  • Exports and reexports in support of government space cooperation and commercial space launches.
  • Exports and reexports for commercial end-users and civil end-uses in Russia.

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